Aon’s Benefits TPA Unit Is For Sale

Eric Muller-Borle2016-12-08

According to a December 2016 Reuters report, Aon is in the process of selling its employee benefits TPA business unit for $5 billion. Aon had in 2010 acquired most of this unit as Hewitt Associates for $4.9 billion.

The negotiations with potential buyers, who are understood to include several private-equity firms, are expected to take more time. The unit’s EBITDA is estimated at close to $500 million, implying a multiple of 10. Most deals close at a multiple of 6 to 8 times EBITDA, which would value Aon’s TPA business at $3 to $4 billion and imply a significant gap with Aon’s asking price. However, private-equity firms have been attracted by the steady and predictable cash flows that TPAs can generate, and may be prepared to pay a premium in return for lower risk.

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The Author

Eric Muller-Borle

Global Benefits Vision founder and expert in global compensation & employee benefits, global mobility and insurance at large. A former industry executive and management consultant, Eric leads a team dedicated to provide accurate, high value business information to today's practitioners.